Why do most new traders fail?
- Thread starter FTNHILLSTRADER
- Start date
I don't want to sound like I'm promoting. But, you might do well looking for a mentor (hint check the classifieds). Black Bison also offers mentorships (not validated by me personally). Don Bright has also been said to know something about the markets (not validated by me personally). There used to be a spread professor here(?), as well.
I mean why in the f-king world would you try to trade for a living if you don't believe there is any rhyme or reason to the markets? You realize if you are playing a random game and paying money out each time to trade that you will be expected to lose 100% of capital in time.
I trade to serve. I trade to be the best in the world. If you don't have a call to serve then I'm not really sure why you would try this. As for strategies, some successful traders only trade mechanical systems but I value the "all guiding hand" of my market read.
The professional trader desires consistency and to manage risk.
I mean why in the f-king world would you try to trade for a living if you don't believe there is any rhyme or reason to the markets? You realize if you are playing a random game and paying money out each time to trade that you will be expected to lose 100% of capital in time.
I trade to serve. I trade to be the best in the world. If you don't have a call to serve then I'm not really sure why you would try this. As for strategies, some successful traders only trade mechanical systems but I value the "all guiding hand" of my market read.
The professional trader desires consistency and to manage risk.
You could ask the same question of any highly-competitive profession. Every year there are tens of thousands of young golfers who want to make it to the professional golf tour. Ninty-nine percent of them never make it. Every year, thousands of people flock to Hollywood to become a movie star or movie director. Ninety-nine-percent of them end up waiting tables. Any profession where there's big money to be made has a very small percentage of winners. Trading is no different.
The answer is pretty simple. Newbs think they can learn trading in a matter of months. It's like trying to learn law by taking a few summer school classes. If you don't have a thorough understanding of the science of randomness you are absolutely certain to fail. The market is the biggest random number generator mankind has ever seen. It's a statatician's dream come true.
I agree there definitely needs to be some element of participation too, such as trading just 100 shares at a time or paper trading on a simulator.
My main point is not that you actually need to watch every single tick, but you should be actively engaged watching the market and logging as much screen time as possible between 9:30 am and 4:00 pm each day watching charts (and Level 2) move. If that's not for you, then it would probably make the learning process take a lot longer.
This is an excellent simple day trading strategy. You need to study gap behaviors so you aren't trapped into large losses in the event the trending move breaks down. Momentum can reverse suddenly and irreversibly at times, though that's rare.
You buy on the gap-and-go, but suddenly price reverses and the opening price breaks down. What do you do? Do you keep holding? Do you turn your day trade into a swing trade, hold and hope?
Study the behavior of gap-up momentum stocks in detail. Print/save as many charts as you can and make notes about the patterns that succeed and the ones that fail. Look for clues to exhaustion, continuation, etc. Make notes, and set rules and go for it.
If you set hard, fast rules for entry, management and stop losses, this strategy will be a real winner. I can't emphasize enough what a simple and effective day trading strategy this is.
I experimented with this on paper for along time and I now occasionally trade it in the retirement accounts when I'm deep into the Zen of trading my main instrument.
Plenty of good stuff has already been said. Just to add a couple of thoughts..
When I was starting out, I certainly had a very limited understanding of how the market worked. I didn't understand the other participants in the market and simply assumed that stocks would go up and down according to how well the business was doing, PE ratios, or perhaps some chart patterns which could indicate supply/demand. I was always successful in academics and basically thought I was smart enough to make money in the market since my GPA was in the top 90% and I liked and always did well in game-theory problems.
I came up with a very undisciplined system to buy/sell stocks. Whenever I made money, it added to my confidence in the system. Whenever I lost money, I would blame it on simple/avoidable mistakes I made. Perhaps I didn't interpret the signal properly, perhaps I veered from the system.. but I never blamed my system for being fundamentally flawed. I also never recognized that results could possibly be random. In fact, you could've given me a completely random pattern and I would've told you it wasn't random at all.
I blew out my account on a couple of bad trades. I realized how unforgiving the market could be. It was a hard lesson in money management.
... this is getting longer than I thought so I will just stop here. Basically, I think newbies aren't able to have an objective view of the system they use to trade. They will always think they're just one step away from an incredible system. They also take bigger risks than they should.
some of my experience
1. There are certain number of mistakes you can make in any job/work.
2. It is important to get to know them, experience them.
3. Its critical in which order you face/ experience them.
4. It helps a lot if some one can point them to you before you start this journey.
5. Even if you know all the mistakes, experiencing them is inevitable for most cases and is the best way to FEEL them.
6. There is a certain element of LUCK or Uncertainty involved in this business. Sooner you realize it sooner you will set free from emotions whn loss happens.
7. Will you be success full depends on the path you take and your experiences will shape you and your future.
Best advise to you that i can give is:
START BACKWARDS because Markets are FRACTAL
1. There are certain number of mistakes you can make in any job/work.
2. It is important to get to know them, experience them.
3. Its critical in which order you face/ experience them.
4. It helps a lot if some one can point them to you before you start this journey.
5. Even if you know all the mistakes, experiencing them is inevitable for most cases and is the best way to FEEL them.
6. There is a certain element of LUCK or Uncertainty involved in this business. Sooner you realize it sooner you will set free from emotions whn loss happens.
7. Will you be success full depends on the path you take and your experiences will shape you and your future.
Best advise to you that i can give is:
START BACKWARDS because Markets are FRACTAL
Most new traders fail because they have no workable trading system, no experience, no money, and no way to stay in the game long enough to acquire these.
Add that a large percentage of people are generally inept, irrational, and drift through life in a fog of oblivion. These are the types who keep trying to day-trade off tips from CNBC and end up losing their entire $500k life savings over five or ten years.
Add that a large percentage of people are generally inept, irrational, and drift through life in a fog of oblivion. These are the types who keep trying to day-trade off tips from CNBC and end up losing their entire $500k life savings over five or ten years.